If some have their way, this is where we are headed.
Up till now, of course, the program has followed the common workplace giving practice of withholding money from donated funds to cover costs. If those costs are, say, 10 percent of what is raised, the approach for years has been to withhold that 10 percent and pass onto the benefiting charities the remaining 90 percent.
If we switch the system and have the charities pay, the CFC would be able to state that 100 percent of a person’s donation is going to the intended group or groups. It would be nice to be able to say that, and it is important that we all figure out ways to lower the cost of this program to both the government and the donors. We believe it is especially reasonable to ask those who are benefiting – the charities – to help carry the burden.
Some of those urging that charities pick up the tab, however, have added a further wrinkle. They suggest that the costs of the Campaign be covered by charging every participating charity a flat fee, a kind of “participation” fee. Every national group would be assessed one fee; every local group would be assessed another fee. The finance system that has worked for decades in the CFC, in scores of similar state and municipal campaigns, and in private sector giving programs, would be turned upside down. And, we will all be swimming in the rough waters of “unintended consequences.”
We cannot be sure exactly how a flat fee system would work, but we can be sure that many charities, big and small, would walk away. Here’s a simple projection of this new system in operation.
For the 2011 CFC, the almost 200 local CFC zones projected they would collectively spend $29,245,086. To make this easy on everyone, we will round to $29 million.
Let’s assume that half of those costs are to be charged to national charities with the other half being left for the local groups to cover. Half is $14.5 million. (The government understandably aims to bring these costs down, but we need to start our projection somewhere.)
There were 2,536 national groups in the 2011 CFC. So, let’s do the division:
Total 2011 budgeted cost:
Half of that for national and international groups:
Divide $14.5 million by 2,536 charities:
So far, so good. But it turns out that 682 groups in the program each raised less than $5,700 in the 2011 CFC. One can reasonably expect that groups will not be interested in a program where they must pay more than they raise. So if all 682 groups withdraw, we are left with 1,854 charities. We get to calculate again:
$14.5 million / 1,854 = $7,820
By the time we’re done, the fee is about $9,000, and almost 1,000 national and international groups are out.
Keep in mind that what is happening at the national level will also happen in every CFC zone. Thousands of local charities will walk.
Now, fewer charities will mean lower administrative costs. But, an awful lot of federal employees want to support these charities. And they may very well continue to do so – by giving directly to these charities outside the CFC. There goes that participation rate – down again.
Let us be clear: Shifting costs so that charities explicitly pick up the tab does strike us as a good idea. (We’re ignoring for now the voices suggesting that there’s little difference between withholding a portion of a charity’s donations on the one hand and, on the other, asking the charity to write a check for a similar sum as a fee for participating in the CFC.)
But assigning costs so that they reflect how well a charity does is the system that has worked for decades. Perhaps the added wrinkle of a flat fee paid in advance could be left for another day.
What say you?